12 Miss. Code. R. 6-3.106.13.5
Nothing in this section shall be deemed to permit contract award to a bidder submitting a higher quality item than that designated in the Invitation for Bids if such bidder is not also the lowest bidder as determined under Subsection 3.106.13.4, Determination of Lowest and Best Bidder. Further, this section does not permit negotiations with any bidder.
Commentary
The following is an example of a life cycle cost evaluation procedure for purchasing window air conditioners.
Life Cycle Cost Evaluation
All proposals meeting the requirements of this specification will be evaluated on the basis of Life Cycle Cost (LCC). The LCC is the initial purchase price, plus the operating costs over an anticipated life expectancy. The LCC evaluation formula is as follows:
EC = CO / EER + P
Where: EC = Total evaluated cost ($) over the 5-year compressor warranty period.
P = Bid Price ($)
CO = Anticipated operating cost factor of the unit over the 5-year warranty period.
EER = The certified Energy Efficiency Ratio.
The EER is the quotient obtained by dividing the BTU/hr. output by the electrical watts input during cooling.
This value represents the relative electrical efficiency of room air conditioners. (Use higher EER where there is a dual voltage.)
CO = (R) (H) (K)
Where: R = Rated minimum capacity from the bid form.
H = Total operating hours over 5-year period in each area. (5000 hours)*
K = Cost of electricity within each area in $/watt hour
K = $0.07 per kilowatt-hour = $0.00007 per watt-hour
Vendor A bid $375 for a 12,000 btu unit with an EER of 10.0
Vendor B bid $345 for a 12,000 btu unit with an EER of 9.2
Looking only at price the contract would be awarded to Vendor B.
Using the calculations:
Vendor A, EC = (12,000 x 5000 x .00007) / 10 + $375 = $795.00
Vendor B, EC = (12,000 x 5000 x .00007) / 9.2 + $345 = $801.52
As can be seen by this example, the higher priced air conditioner with the higher energy efficiency ratio is the better purchase because of the lower total cost over the life of ownership. The contract would be awarded to Vendor A.
12 Miss. Code. R. 6-3.106.13.5